But another executive order issued the same day against a different Chinese-owned app has the potential to rattle even more businesses in the global tech industry.
According to data from PitchBook, a research firm that tracks private and public capital markets, Tencent has made 53 investments globally in 2020 alone compared to SoftBank’s 37 investments. But SoftBank has been more active in the US market: Just three of Tencent’s deals this year have been in the US compared to SoftBank’s 16, according to PitchBook.
“Tencent is perhaps the most powerful investor in China today,” Arun Sundararajan, a professor at New York University’s Stern School of Business, told CNN Business.
By targeting a Tencent property, the Trump administration may put a “serious damper on Tencent’s global expansion ambitions,” Sundararajan said. Beyond that, the Trump administration’s moves could further disincentivize Tencent and its peers from investing in and partnering with US tech companies.
“The level of uncertainty for investors and incumbent companies in the US markets is at an all-time high,” said Harry Broadman, a former US trade negotiator. With growth already slowing down because of the pandemic, he said, “this is hardly the time to inject even more uncertainty in the economy.”
The crackdown on WeChat could also raise questions about whether the administration will direct its interest to companies with ties to Tencent, whether through partnerships or investments.
“We are in the process of seeking further clarification,” he added. (A Tencent spokesperson told CNN Business in a statement that it is “reviewing the executive order to get a full understanding.”)
Demers also said the administration’s actions over the past year are intended to “ensure that we have trusted vendors from trusted countries — and that is countries that share our same political values — that are running these telecommunications networks over which our entire lives are already running and only will run more so in the future.’
Whether the Trump administration stays focused on WeChat or probes Tencent more broadly, its moves could fundamentally change the digital marketplace.
“I don’t think we really understand yet that, by striking at the Chinese companies that stand out because they try to penetrate international markets, we’re essentially saying to the world maybe these internet markets are not international,” said Peter Petri, a professor at Brandeis University’s International Business School and a non-resident senior fellow at Brookings.